Investment Q&A

Q: I know you don't believe in timing the market but after the last few years i've ended up with a fair bit of cash on sidelines, yielding around 5%.
Post pivot i'm now thinking about when/how to deploy. Assuming interest rates have peaked and we start seeing cuts in 2024 i expect cash yields to start decreasing as well.
So if you wanted to "broadly" deploy your cash reserves throughout 2024 how would you proceed? Thinking some mix of SPY, RSP, EMV (much smaller allocation) as I have retained most of my high convinction Canadian stocks.
Dollar Cost Average monthly or quarterly
Wait for next broad pullback, we know it's coming just not sure when. Can still get a nice cash yield while waiting.

Q: Given your view on small caps being undervalued what’s your opinion on
iShares MSCI USA Equal Weighted ETF
Symbol EUSA
Is there a better choice?

I asked about wrong ETF, I am interested in small cap equal weight ETF(s)

Q: Dear Peter et al:

This is more of big picture and history based question even though I am old enough know that the past performance doesn't mean anything going forward!

Has there been a period when Small cap growth or value stocks outperformed the Large caps growth/value during deflation/stagflation, recession with with a capital R or a lower case r, or even in a nominal sideways market? Do you see such a scenario evolving in 2024/2025? If so what are the ETFs that one could employ to benefit from such a scenario? Lightening up the large caps and switching to small caps for a year or two , is this a good strategy going forward?
I have included some of the ETFs that you are fond of from your Q&A. However feel free to add or delete!

Many thanks.
Mano

Q: Hi 5i Team,

I keep hearing that purchasing bonds is currently a generational opportunity given how elevated interest rates currently are and we are likely at the peak point of the rate cycle. How would you recommend approaching having exposure to bonds in order to capitalize on the opportunity?

Are there any other sectors or areas of opportunity that are out there that you think one should get exposure to in preparation of interest rates eventually coming down?

Thanks as always,
Jon

Q: Peter; I own the IWO - what is the difference between the two ?Thanks.
Rod

Q: Dear 5i team.

Can you list US and Canadian small cap ETFs that are options currently, and which you prefer given the outlook over the next few mths?

Many thanks for your help.

Q: What do you think about taking a new position in Russell 2000 at this time? Dan Niles was on CNBC talking about how the index may outperform some of the big tech names. I am also considering a position in SPY and/or the QQQ. I tend to buy and sell stocks too quickly and my thought was to buy an index fund with a view to holding longer term so that I don't have to worry about individual names. Thank you,

Jason

Q: Hello, I asked a question, not long ago, on XSU. Thank you for your answer. Now, I would like you to compare it to XSMC. I know it is way smaller, but the returns have been much better the past 2 and 3 years, 15 to 20% better (I know they don’t follow the same index). This order of magnitude is still surprising to me, unless much of it is a function of the exchange rate fluctuation. I know it is difficult to evaluate, but is this outperformance likely to continue? Is the small size of this ETF a dealbreaker? Thanks.

Q: If one already has a 10% weighting in ITOT would an additional position in a small cap fund be warranted? Which ETF is preferred for small cap exposure and why - IJR or IWM? It appears IJR has outperformed on all timelines. Is this due to its more concentrated approach? Is there a global small cap etf that is recommended?

Q: Not having a lot of personal expertise in U.S. small caps, I thought a closed ended fund or index ETF might be the way to add some U.S. small cap exposure. Can you comment on the value of Royce Micro Cap Trust or the Russell 2000 for 5-10% of an otherwise reasonably diversified portfolio?

Q: Hello, what Canadian ETFs would you recommend for US or global smallcaps? I would prefer ETFs with daily volumes higher than 10k per day. Thanks.

Q: What are the current dividend yields on these?

Q: Our daughter has secured a great job and is now in a position to invest in TSFA and RRSP's. I'm thinking she should start out investing in ETF's. Can you please recommend your favourite ETF's for each, would you also diversify to include some foreign exposure at this time ?

Q: The first ones to forecast next year results are Goldman Sacks and they are pretty bearish on the stock market. They forecast the S&P to finish the year at 4000 after picking up steam in H2 while the first half should be down while traders will adjust their premiums with no gain in profits next year. Do you agree with their thesis? Where do you see the better overweight. In US with blue chips or smb ? Canada with oil and basic material? Look for dividend to try to make some yield? Please elaborate on your rational. Thanks a million$$$

Yves

Q: Your last market update contained the following noteworthy statement:

“For investors with a long-term horizon, small-caps and mid-caps are presenting investors with a roughly once-in-a-decade opportunity.”

Can you recommend a few US ETFs that fit into this thesis?

Q: Are there any Canadian based ETF’s that monitor the US based IWM, IWN, or IWO ETF’s. Thanks … Cal

Q: Can I have your opinion on the risk/reward for Small Caps in general right now? Some analysts are suggesting Small Cap valuations are currently low based on their historical position relative to larger cap companies and should “revert to the mean” in the medium term. If you were to invest in this theme what ETF would you use? As always your insights are greatly appreciated.

Q: Hello,

Please recommend some total market ETFs for the Canadian market, the American Market, for growth, for income, and/or the best overall in your opinion.

Thanks,

Mark

Q: I would very much value your opinion /comments about Larry Swedroe's October 11, 2013 article in ETF.com entitled "The 'Black Hole Of Investing'" ( https://www.etf.com/sections/index-investor-corner/20092-the-black-hole-of-investing.html ) about why small cap growth stocks are the worst-performing segment of the investment market. And why you recommend them in your Growth portfolio (IWO) instead of small cap value, for example - Thank you.

Q: Historically small cap index fund outperforms S&P500, but last couple years small-cap lags, I am thinking it might be a good time now to start to invest in samll caps...do you think this logic is justified? If so, which small cap etf do you suggest? Thank you!